$1.5 billion fine. it's wednesday, december 19. closing in on christmas, 2012. and "squawk box" begins right now. good morning, everyone. welcome to "squawk box" on nbc is. andrew ross sorkin is out today. we hope he's feeling better soon. as we've been talk being the fiscal cliff this week, president obama and speaker boehner appear to be inching toward a deal. last night republicans announced plan b in case talks fail. they'll be moving to pass their own tax bill as a backup plan to avert the tax hikes. and the automatic budget cuts set to happen next month. it would extend low tax rates except on those with incomes of $1 million and above. president obama's latest position puts that threshold at

$400,000. >> at this point, having a backup plan to make sure that as few american taxpayers are affected by this increase as possible. >> now no one expects that the gop bill will pass the democratic-controlled senate. in fact, harry reid said forget it, they're not going to be passing any of these things. but this is another option out this. and it does change the dynamics in terms of who's going to be blamed for raising taxes. we'll see how this plays out. among our guests on the topic this morning is dccc chairman steve israel, congressman from new york. plus, we'll also be talking more about what's at stake in washington and how the fiscal cliff is likely to effect investment decisions. we have value investor leon cooperman, he's going to join us on set starting at 7:00 eastern time. then at 8:00 eastern, we have black op co-founder and ceo ralph schlosstein. and lynn hutchins will join us.

we'll talk about what they see playing out and what they think is working when it comes to the markets now. >> the bill that the president says is in the house that he will sign if -- that's in the senate -- >> the senate. >> the senate that he will sign if the house passes it is what? >> that is $. >> -- that is 250? >> 250? >> he said 400. he said, i have the pen, let's keep tax rates where they are for everyone at 250 and below. so this one, that's c these guys are pretty clever because that would keep rates where they are for everyone at a million and below. no middle-class taxpayers up to a million dollars -- >> that's no matter what, isn't it, in either bill? >>yon r -- i think it would be the same in either one. that's not -- what reid and i guess pelosi, you saw that, said she opposes the million-dollar

thing. a lot of people if back on what they say. the difference would be that one is 250 and below, and the other is a million and below. more taxpayers would not see a tax increase. >> what does it do with the budget cuts in either one? does it not deal with them? >> either way -- oh, no. >> the sequestration budget -- >> yeah. in the -- >> budget cuts go in -- >> for plan b. no, they would be delayed. >> they would? >> yeah. this is a way that, you know, they're trying to shift the onus now back to where it would be the president and the -- and the senate that's saying no to keeping rates low for the middle class. so they're both trying to -- >> political maneuvering. >> a tie ground. someone's trying to be on the high ground. i wonder what would happen if the republicans -- say they go to 400. i wonder what would happen then. would reid pass the 400? >> probably. i mean, since it's on the table from the president, why wouldn't he? i guess the question becomes, can he get the votes for it. >> because at that point -- there are r some people who think that the white house doesn't really necessarily want

a deal that badly. that's the slow walk and everything else. if you do the 400, that takes -- we'll no longer have the taxes to talk b. and all we're going to have at that point are entitlements and spending cuts. that would be a discussion that maybe some people, you know, can't deliver on and don't want to have. >> it is late in the day to be dealing with this stuff, though. december -- >> we would pass it, but then the next deadline becomes a debt ceiling. that's the other thing that, you know, the white house really wants. they want a two-year -- i don't know, if they did 400 we'll see. what if they do five, maybe they come down to 500, kind of a compromise -- >> people thought for a long time maybe they end up. >> right. i think boehner and at this point it might be in the white house's best interest to maybe do something at 500 instead of having this plan b where they say no to that, then -- anyway. yesterday -- >> big gains. 115 points for the dow. >> yeah. for whatever reason. it kind of -- that was in the

face of what senator corker told us, and it went back to thinking that maybe there is some movement happening here. i wonder if we go up so much in anticipation that when it finally happens, we -- >> sell off. >> that we're just relieved, and that you don't get the huge bounce. but europe is also tracking what we're doing here. as it should really. our economy is much more important to the globe than what happens in any of those little economies over there. the shares drifting higher in early trading on expectations that a budget deal is closer. in asia, japan's nikkei rising above the 10,000 mark, wow, the first time in more than eight months. still a ways from 50,000. among the catalysts, expectations of more aggressive monetary stimulus from the bank of japan. the boj wraps up a two-day meeting with a policy announcement tomorrow. the world bank in the meantime is raising its 2013 economic growth forecast for china and for developing east asia. the organization says that the region remains resilient despite the lackluster performance of

the global economy. the world bank sees china expanding by 8.4% next year. it's expecting that it will be fueled by fiscal stimulus and the faster implementation of large investment projects. today's forecast is higher than an earlier one that was sited in a world bank report in october. 8.4%, not bad both if you can get it. speaking of china, the united states is moving forward with plans to slap steep anti-dumping duties on wind turbine towers that are imported from china at prices that are deemed unfairly low. the news from the commerce department comes as u.s. officials welcomed a high-level chinese delegation for trade and economic talks. the u.s. trade panel has final approval over the duties and is expected to vote on the case in late january. in corporate news, ubs hit with a $1.5 million fine today. that will add up, a few more of those. the swiss bank admitting to fraud, it paying bribes to brokers. and pervasive, they call it manipulation of libor by dozens

of staff. the penalty was agreed to with u.s., u.k., and swiss regulators. it is more than three times the $450 million fine that was levied on barclays in june. the second largest fine ever on a paid -- paid by a bank. it only was topped by the $1.9 billion penalty that hsbc agreed to last week to settle that money laundering probe. >> crazy thing that stock's up. it's leading the exchange there today because people had been expecting maybe a slightly higher fine even than that. three times the amount. it was supposedly taking place for five to seven years, 30 to 40 traders have left. pretty pervasive. >> i wonder how much they -- they make money or lose money after -- >> after all was said and done. $1.5 billion. >> probably lost. they did well. the libor stuff, if you can set rates -- >> well, and the crazy thing, it affects so many different instruments and so many people and so many businesses. >> right. >> i don't know that you could ever actually figure out all the implications from it. >> right. from everyone. and in a related story this

morning, the f.t. reports that the new york fed was warned as early as mid 2008 that banks might have been misrepresenting their libor borrowing rate. that was to aid their own trading positions. and that date is much earlier than previously known. according to the f.t., yep, then-new york fed president tim geithner was told by a senior colleague in a may, 2008, e-mail of her concerns about banks' deliberate misreporting. the e-mail part of an internal push among some at the new york fed to press the bank of england and british bankers association to reform the benchmark lending rate. >> he did raise some of -- alarms. he did talk to them, just didn't stay as publicly as some say he should have said. i mean -- >> geithner -- >> he did kind of warn them about some thing. >> right. the sec is outlining potential ways to reduce conflicts of interest at the country's largest credit rating agencies. the regulatory agency failed to take a strong stand on specific industry reforms. the sec report abstained on next

steps, and it also recommended further discussion of the matter. the report was required by a provision that's known as the franken amendment. in the 2010 dodd-frank reform law. the franken provision, yes, you know who's probably named after, required the stoek conduct a review of the feasible of a new system in which a public or private utility or board would assign work to the agencies on structured product ratings. >> huh? tough -- >> do you understand any of that? >> no, but it's tough to jump from snl to the senate without -- like the bill murray amendment. >> fred grande did it. >> you laugh at the bill murray amendment or the garrett morris provision. >> i guess the kidding around is -- >> at this point. or, you know, that shows i'm pretty lame. i can't remember anyone except pack in -- >> the way, way -- >> yeah. a lot of -- how about chris farley? poor chris. >> yeah. jim blushy -- john belushi.

>> that would be alcohol for everyone, i think, amendment. beers for -- >> college for everyone. >> yeah, college for everyone. no studying, but college. >> yes, but college with your college sweatshirt. u.s. authorities are examining trading by one of sac capital advisers' most successful portfolio managers. kate kelly's been reporting on the story. reuters says that the latest manager in question is gabriel platkin. a probe into the $14 million investment in weight watchers last year. platkin is a specialist in consumer and retail stocks. he makes investment decisions for more than $1.2 billion worth of assets. and we do have a winner. getco buying knight capital for about $2 billion. it sweetened its offer for the market-making firm to beat out a rival. getco said to have clinched the deal after it increased the amount of cash in its cash and stock offer. the deal is 2/3 cash, and it values knight at $3.75 a share.

stock as you see in the premarket, well below that at $3.42. in earnings news, oracle says software sales growth will stay strong going into the new year despite the fiscal cliff fears. quarterly revenues and earnings were better than wall street was looking for. and ford says that a recent spate of safety recalls have not hurt sales. chief operating officer mark fields told reporters that consumers have a good perception of the quality of ford products, and overall sales are, in his words, doing well. but he declined to offer an estimate of december sales at this point. let's look at the markets again this morning. we did show you the futures. they are indicated slightly higher after big gains over the last two days. markets have been up something like 2.5%. just over the last two trading days. you see the dow future up again, up 35 points is the indication above fair value now. s&p up more than four points. oil futures up 42 currents to see 88.35. the ten-year note, the yield is -- wow, 1.8% today, joe.

1.801%. still well above -- >> holy smoke. >> moving higher all the time. if you leak at the dollar this morning, also you'll see that the dollar is down against the you are again, 1.3274. wow, weird moves. the dollar is up again the yen, 84.41. you saw the moves in the nikkei in japan. huge moves there because of the expectation that they're going to be doing more to help things out, more stimulus is expected. and the bank of japan expected to get involved. of course, that hurts the yen. that's why you see the dollar higher against that. gold now up about $4.10 to 1,674.8 an ounce. below 1,700. time for the global markets report. kelly evans is standing by in london. a lot of action over there today. thank you. there really has been. and in fact, it's the greek banks which are leading the way. i can't remember the last time we said that. if you look at trading broadly, it's the most beaten down areas where we're seeing the strength this morning. again, here are some of the names to mention whether it's

the national bank of greece. we saw these up in the range of better than 8% earlier. now in the range of 5% to 8%. again, if you look at the levels, you see we're snapping up from low valuations generally speaking. it doesn't take a lot at 63 cents to get an 8% move. quick look over here if you want to take a shot of the wall behind me. it is green for the most part. and greece's borse is one adding 2% today. we're seeing that reflected across the bond space. portugal for example seeing ten-year yields falling. same for spain and italy. the boreses and footy 100, the xetra dax, this has been the outperformer up in the range of 30%. another .3% after the ifo out of germany. came in better than expected. again, a good sign for growth. not necessarily, though, for those who would like to see a weaker europe. the ibex 35 adding 1.3%. and the nikkei, as you

mentioned, up above 10,000 for the first time in eight months. adding 2.4%. better hope the moves in the japanese government or bank of japan pan out. we'll get the bank of japan's decision tomorrow. but this comes on the day when, remember, it's on the weakening of the yen which we can show you on hopes that that will help the japanese corporate sector. remember, we saw export figures showing a drop of 20% in exports to the use. 15% to china. again, there's a lot of expectation built to this. the aussie/dollar remains the underperformer as we continue to evaluate china's internal rebalancing. now the sterling is stronger, the dollar/yen you already mentioned. and the euro/dollar to get back to the point about the ifo survey is adding .3% to 132.-- 1.3274. we get a rally in the euro. our guest this morning suggested it will be the 150 to 160 range before that becomes any real problem for competitiveness. guys, if we get anything near there, that will certainly be a

troublesome development, shall we say, for the rest of the periphery. a lot of cross currents this morning. back to you. >> did you see the -- berlusconi saying that italy might have to leave the euro -- i love this guy. and -- >> joe, i'll tell you, he has a point. a lot of people say if italy wasn't in the eurozone now, if you were to analyze the italian economy, current account surplus or ability to get there, it's competitiveness, that actually it would be in a decent position on its own. you know, that's a counter factual that may not be worth exploring. although berlusconi's clearly exploiting that perception. >> if germany doesn't agree to have -- to be a real central bank. he's looking good, 76. he's going to run again. his hair is jet black. and i think he's still -- >> i'm sure it's natural. >> you want to avoid him if you can. like -- keep your distance if you would. >> no, i don't have to -- joe, he's engaged now. he has another -- a new wife. >> i didn't realize that. then definitely. >> yes.

i'm devastated -- >> the world's women are safe now. he's engaged. now, in february, there's another election. this is what i love -- he's way behind the leading party which has 30%. the leading party is able to -- >> over there, you got to -- >> i know. i can't believe you can run a country or -- yeah? >> just keep in mind there may be an ulterior motive for his return to politics. he is looking for immunity from a lot of charges against him that he could get by having some position in the government each if he's not prime minister. >> wow, you are up to speed on this. you got to go over and look into this a little closer. that would be a good excuse to go to italy, the greatest country i think, at least that i've been to. thanks, kelly. appreciate it. france is pretty good, too. >> bye. coming up, the early read on the trading session from the futures pits in chicago. first, are you expecting a year-end bonus? what is that? you ever heard of -- no. we have not. a survey by challenger, gray,

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dow futures up. s&p 500 up. dow up jed by 15. big gains. the markets up 2.4% over the last couple of days. in our headlines, u.s. cigarette makers have reached a settlement with 17 states in a long-running dispute over the payments they are required to make under the 1998 landmark anti-smoking agreement. under the saidment, states will -- settlement, states will receive $4 billion in disputed payments. the manufacturers will receive credits against future payments, as well. time for the national weather forecast. todd santos is standing by at the national weather channel. good morning. >> good morning. actually we're tracking snowfall. at least in the northeast today. shouldn't be an issue as far as travel is concerned toward boston. a good stretch of maine dealing with the snow. rain line will be moving closer toward the portland area next few hours. you see that here on the model forecast through this afternoon. notice all of that remaining

well to the north of boston. pitts field and western mass reporting light snow the last couple of hours. otherwise into wednesday, much of the action centered well to the north of some of the big transportation hubs. mostly sunny today toward new york city. d.c., as well, coming in quiet. philly, temperatures, getting to the 50s that direction. 45 in new york city. the big story is actually going on to the west. did want to show some of the snowfall totals to the north. some of that includes the system that will be getting going the next couple of days. here it is in the four corners. flying out of denver, an increasing chance for snow across the area. also really gusty winds on the back side of the system as it pushes out. doesn't look like much. denver to cheyenne, snow. sweeping east. not too big of a totals to start with, but tonight and tomorrow, by this afternoon, may get snow going toward omaha, nebraska. then it picks up, big-time windmaker. winds west to the northwest. blizzard conditions, even into portions of southern wisconsin as we get in through thursday. and of course even chicago,

starting with some rain late tonight. maybe switching to snow tomorrow. here's what the system looks like. temperatures around 23 in denver. that's today with snow in toward des moines by later this evening after the commute. then there's tomorrow. late with the rain, then the snow in places like chicago. northern portions of, say, let's -- theft once you get into the great lakes, dealing with the snow side of things. a stretch of michigan could see mixing. into friday the system makes its way to the east coast. new york dealing with rain in the morning. d.c. may be safe from that. on the back side, a lot of us will be cooling down. a big-time travel week, especially toward the holiday season. so a number of things to keep a close eye. and saturday almost all the -- close eye on. and saturday almost all the snow is lake-effect snow. the eastern edge of the lakes through western p.a., western new york, the better chances for some of the snow with that system. a lot to watch there, guys. >> all right. and you don't -- that's all loaded into your thing. you press -- press it, and it just -- it happened. you don't have like -- you're not pressing snow. you don't have like a rain

button or sleet button. you can't just turn that into sleet, can you? >> if i could do it, i would turn atlanta into a ski town. >> that would be good. in denver now, do you know, is it going better than last year -- in the reeks there, do they have a better base? is it looking good for the season, do you know? >> so far, it's actually looking pretty good. and with this storm, places like steamboat likely to get hit with the powder. next week the northwest gets going into seattle. so far the ski season out west is looking good. >> come up with the name draco. >> oh, draco? they pulled that out earlier. that was not mine on the list. the storm. >> from "harry potter"? i don't know. >> i don't know. anyway, should have been listening. i didn't -- thanks, todd. i was looking at denver and saw snow. i was hoping -- snow in the rockies. let's get ready for the trading day. michael gerka of spectrum asset management joins us from the

cme. i'd like to ask you, michael, about sort of a composite of all of these different markets because some of them, i mean, the stock market's been going higher. the euro is pretty amazing. back to 132 even though the fed did all of that stuff last week. and gold, i also thought we might see something there with all of this -- all of this easing. it's stubbornly below 1,700. the bond yield, it's not a lot but back 1.8. what's going on? do you know? >> well, i will say this, joe. that you know, i sat in that morgan stanley office by you last week, and their forecast of 138 in the europe looked pretty heavy up there. but it -- you know, what i've been looking at the british pound also. it's a runaway train in currency land. i think roger waters a week ago at the same time said it best. it's comfortably numb. they're willing to give it away. and that's kind of built into the cake. it has nothing to do with the cliff. it's just that a softer dollar is in the cards. i'm not surprised that you continue to see that

follow-through. you know, one of the levels that i'm looking at or that you said about gold is that as gold continuously got hit and hit, and i'm like really watching closely this 200-day moving average because it held so well the last two times it was touched back in september and in august. and that level was 16.62. and lo and behold, look at where the low was that came in within the last 24 hours. it's done nothing but bounce from there. i think we regain back to those levels again, which is a little bit more of a bid in gold. at the same time, watch the s&p. i've got a huge trend line up at 1 1,459. the strength in the stock market is -- inexplainable right now. we've been looking for that for about a quarter. and it continues to build on it. earnings or not. but really i think the big talk or at least what i'm watching a lot is the dollar and the way the dollar continues to get a lot weaker here. >> it's -- okay. so that makes sense. the dollar will get weaker. so the market should do i guess a little bit better.

some things seem like they're decoupling from the relationships that have been in place for a couple of years. >> here's my decouple, all right? in the last 72 hours, we've continuously been hearing about how weak crude is getting. we're at $50 project forecast for where crude's going. and it's been slowly and slowly and slowly going good. i think the real question in crude oil land is the spread between brent and wti and how we've got so wide above 25. then the forecast was that we should probably narrow from there, and it's done nothing but that. i think that's the big talk right now is the -- how this spread has narrowed. a lot of it has to do with a lot of global pressure overseas. especially on the brent side has subsided. and at the same time, we're watching all how the dollar plays inhe you is -- this forecast, a weaker oil, and we've rallied. you've had nothing but talk of, you know, a strength market in gold. and it's come off. then all of a sudden we're starting to see this whipsaw back. this is when markets are really thin, thin and volume's low. >> thanks.

we appreciate it. covered a lot there. don't really know anything yet. but -- we'll have thing to watch. thanks, michael will. see you. >> thank you. when we come back, we'll talk about why the average american might be spending less than normal this month. plus, you remember the saga of former imf head dominique strauss-kahn and what happened between him and the new york hotel maid? that drama is now on stage. we'll have that story. what's next?

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good morning. welcome back to "squawk box" here on cnbc. andrew ross sorkin is home sick. another key read on real estate. november housing starts and building permits are due at 8:30 eastern. starts seen falling 3.2%. permit expected to rise by 1.4%. yesterday a national association of home builders sentiment index rose to the highest since april, 2006. instagram is creating something of a user uproar. the popular photo sharing service is owned by facebook, revealing changes in its user agreement. the changes give broader rights to use its members' photos in advertisements. responding to criticism, inys that it has no plans to incorporate user photos into ads, but this were stories about how they could own your photos if you upload them. a lot of things. i don't know what kind of privacy you can expect once you

start posting pictures into the public sphere. cool pictures. your daughter's on instagram. >> she does. she's got all these followers. when they bought it, they told me it was something that made picture -- >> that was brian door. >> it makes -- >> there he is again. he's working for us this week. dean's over -- >> he's putting pictures of himself in there? >> i guess it's better than stealing somebody else's and putting them up. >> i thought it made pictures look antiquey. >> you can do cool effects. >> that's what they said it did. they didn't understand why they were buying it. i know exactly where that is. that leads to -- loveland. pretty good. there's a play. i love this. the saga of former international monetary fund chief donnique strauss-kahn and what happened -- i hope it's a musical. him and a hotel estimated on stage. it's in a play titled -- uh-huh

-- "suite 2806." >> really? >> there should be singing here. ahh. strauss-kahn's room number, what he had at that hotel, the hotel. the director calls it a 60-minute study of morality, sexual addiction, and power with money between a character very similar to strauss-kahn and a hotel maid. both the hotel guest and the maid come off as manipulative, and the audience says it's hard to know who to believe. it's been a year and a half since the former imf chief and -- leading contender for the presidency of france faced sexual assault charges braud braut by the hotel maid. i think his wife -- >> the wife is -- >> filed -- leaving him, yeah. criminal charges were dropped, and the two reached an undisclosed settlement. and dsk faces charges in an unrelated case in france this. guy's all over the place, living the life.

he will find out today if the charges will be thrown out. or gees, all kinds of stuff. >> a strange fellow. interesting that they had him in a robe. according to the charges he wasn't. >> he's full of life, becky. in a european way, he's full of manliness and life. >> a freak. >> he's a sexual freak. but don't you think it would be better as a musical? >> yes. that point i agree with. >> seriously. this should be -- then i might go. let's check the markets this morning. as we've been talking about, the futures have been indicated higher. right now you see that those dow futures are up by 33 points. this comes after two big days of gains. there's a lot of talk that they are moving closer to some sort of an agreement over the fiscal cliff. now you also have this plan b that boehner has come up with. this is going to be something where in his idea they would raise -- they would keep tax rates low, keep the same tax rates on anybody who's making a million dollars or less. >> the rest -- >> the plan in the senate is for

$250,000 and below. the president has talked about $400,000 and below. but this plan b is interesting because it does keep the sequestration cuts in place. >> we've got to deal with -- >> the $1.2 trillion in cuts, more than the president is offering. this is something that harry reid said will not pass the senate. obviously this is a lot of the political maneuvering that takes play ahead of time as they continue negotiations. >> huey lewis had an album and song called "plan b." i think whenever we saw "plan b" that we should play. it it was called "plan b." is it ready yet? i don't think -- we'll get it. >> i took the kids to see "spiderman" on broadway. "rise above" is the theme song. did you remember that? >> that may be subliminally where i got it. let's look in europe also. >> with power comes great responsibility. that's what we think about here. >> this is true.

green arrows in europe, as well. ftse up by .6%. and the cac in france is up by almost half a percent. in asia overnight, you saw massive gains there, too. the nikkei in particular, up 2.4%. this is the first time that the nikkei has been back above 10,000 since, when is it, march? this is, again, just the idea that there's going to be stimulus coming from the bank of japan with the change in leadership in that country. oil prices have been a little bit higher this morning. you see now they're up about 37 cents to 88.30. the ten year, we looked a few minutes ago, the yield was above 1.8%. it's still there. 1.803%. the dollar has seen interesting moves today, as well. down against the euro which is all the way up at 132.77. it is up against the yen, though, because with that stimulus from the bank of japan, that would put pressure on the yen. you see this morning, dollar/yen at 84.42. gold prices up slightly, well below $1,700. up $1.70 at 1.629.

>> -- at 1,672.4 an ounce. i'm not going to speculate but we have clarification that the plan b plan in the house definitely keeps the sequester in there. and that is part of the negotiation. >> all right. consumer confidence could be plunged off the fiscal cliff. not only are businesses spending less, but a survey says that individuals are now holding the purse strings tighter, as well. joining us now from palm beach, florida, is greg mcbride. he is senior financial analyst with bankrate.com. and greg, what's happening to this point? we had seen the consumer kind of hanging in there and being resilie resilient. are they starting to worry about the fiscal cliff as well? >> they r. one in three americans say that just in the last 30 days, they've cut back on personal spending, specifically due to concerns about the fiscal cliff. and we've seen a big change really just since election day. since the election was resolved. we saw consumer focus shift

toward the fiscal cliff. we've seen a change in terms of how they feel it their overall financial security. and now the recognition or acknowledgment that they're dialing back on their spending. >> and the people who will are really dialing back are those who are under 30 or over 65? >> under $30,000 a year annual income are those most likely on the basis of income to dial back, which is not really a surprise. on age, we kind of see polar opposites. retirees, those 65 and up, many of whom have seen their interest income squeezed in the low rate environment. they are most likely to cut back. we look on the basis of age. those under 30 ironically were the least likely to have cut back on spending in the last 30 days. >> okay. and where are you really seeing this play out? i mean, this is something that they say very much the fiscal cliff is -- just because it's been worked under the front pages of newspapers at this point, talked about on air? >> yeah. absolutely. i think, look, a lot of this feeds into the concern that people will have about is this going to lead to a recession. i don't think it's sing later that -- gee, higher taxes or spending cutbacks.

i think it's the broader macro view. the concern that what's going to happen economically in 2013. it's not the type of environment that inspires the type of confidence we need for people to spend when they're concerned about what's going to happen with the economy. what that bodes for unemployment, their income. that makes them more inclined to be tight fisted in this all-important holiday shopping season. >> greg, how long have you been conducting the survey? how does it match up to previous years? >> we've been doing this for two years. and with -- in every month except for two of those 24 months, people have indicated that their financial security has deteriorated over the prior year. the exception was a couple of months earlier this year when everybody was feeling a little better. but that was the exception. we did see a big turnaround really since october. again, once the election was resolved, the focus shifted toward the fiscal cliff. we saw a big drop in both november and now again here in december as consumers' worries about the fiscal cliff and the economic impact ramp up.

>> all right. greg, thank you very much for joining us today. appreciate it. >> thank you. flaernl aren't enough republicans that would even agree if you raised taxes even on people above -- each above a million. that's what they called it talk about the slippery slope, that are you agreeing to raise taxes. they say it's a bad way to start negotiations. on the left, the cost of living increases, they're allaying fears. and what obama offered, they're trying to keep the far left from breaking with the president. >> both sides are having trouble -- >> with what we have now. >> yeah. >> with as far apart as we are now -- >> i read paul krugman yesterday -- >> why? >> i read him all the time. >> you pick up a -- a karl marx book once -- >> i follow him on twitterment a -- twitter. his latest point, he's been thinking about the latest offer from the white house -- >> la, blah, blah, blah, blah, blah, blah, what, blah, blah, blah, blah, blah, blah, blah,

blah. i don't want to know. blah, blah, blah. you don't either, do you? >> it was -- would you join us so i can talk to but this? >> no. >> it was -- >> i don't care what he -- [ all talking at once ] >> the lesser of two evils. >> blah, blah, blah -- >> but he would not agree to anything else if there was any other budging on it. made you hear it. >> no, i didn't. anything you see on "squawk," tweet us,@squawkcnbc the handle. coming up, why canaccord enuty is downgrading shares of the tech giant. tdd#: 1-800-345-2550 this morning, i'm going to trade in hong kong. tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan.

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shares of apple losing almost a quarter of their value since the high in september. can the tech titan make a co comeback, or is the stock past it its barak obama? joining us is mike walkly from canaccord. 500 billion plus market cap. 25% more than exxon which i know is a big company that does a lot of stuff other than, you know, making these things, mike. is it cheap you in or -- i can look at reason that it's seeing some of the best levels. everybody that could ever like apple's stock was in at some point. who was left to still buy it at 700? >> yeah, i think that's a good point. at $700, the iphone 5 into the

launch, that was priced into the stock. clearly our talks with investors is just a worry a year -- from now, how do they grow after the upgrade cycle to the iphone 5. we think that led to some of the sell-off and worries about gross margins maybe coming down as they come downstream on their pricing. but we do think at the valuation here, still a good growth company. we have a buy still on the stock. we did lower our price target basically on our checks. we have seen the ipad mini cannibalize the ipad 4 we thought. that's where we cut some numbers. we think with the iphone lots of opportuniti opportunities for groelthd. we believe apple has -- for growth. we believe apple has what it takes to continue to grow earning and generate cash to send the stock higher next year from current levels. >> i wish i could see the future. on the one hand, you know, as you say, the -- the market penetration is still -- small

for apple. it's -- it's not expensive in terms of valuation even though the market cap is huge. it's -- you know, priced earnings multiple, it's not expensive. but steve jobs is gone, and there's smart competitors. i wonder if apple has a lock on what kept it ahead of everyone else. you have smart guys at google and samsung, competitors that see the big pot of gold to go after. and -- do they -- is apple going to be able to go next? no natu no more ipads, is it apple tv? >> one thing we've seen in our check. we do extensive store surveys. this time when the iphone 4, sales tapered off. with the galaxy four and the note that consumers like the larger screen innovation of samsung. they've held in and done well.

head to head with the iphone 5. that's been a surprise in our check showing the innovation curve. but on the same time we believe apple could pull in a product cycle maybe into june, a little earlier. the cycles getting shorter. we think samsung will pull up the galaxy 4 launch earlier. as the titans get more aggressive on products, it could be good for both companies and the industry. last quarter, they combined for 106% of industry profit. >> we've got to go. would you be flabbergasted if apple was at 532 shares a year from now? >> no, i -- >> it would be justifying a half a trillion market cap and backing and filling. a move from 9 beiillion to 500 billion. to go from a trillion to billion, i don't know. appreciate your time. thank you. >> thank you. >> all right. when we come back, you ever

wonder what you'll look like in 50 years? >> i want to look like anything. >> how about -- yeah. 50 years -- >> anything above ground. >> how about your investments just a few decades from now? one well-known bank says it could give you a snapshot of both. scary details coming up. excuse me, sir i'm gonna have to ask you to power down your little word game. i think your friends will understand. oh no, it's actually my geico app...see? ...i just uh paid my bill. did you really? from the plane? yeah, i can manage my policy, get roadside assistance,

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what i care about is reducing these deficits. not only will we have explosive growths in markets, explosive growth in this country. we've been taking care of volatility. >> i think technology is kind of interesting should we get a deal. >> the second largest customer of china, the "uss avoiding the

fiscal cliff will be very good for them. >> a lot of people are trading on that. >> let's rise above. eyeglasses, that's an idea glasses, i-phones. i-glasses. >> they've already done that. >> are you saving enough for retirement? maybe not. m one bank is resorting to extreme measures to get you to do something about that. >> it's pretty terrifying. we'll show you how they're tugging at your heartstrings. it's ebenezer screwing with a premonition of hisself. >> reporter: it's not a pretty picture. what will you look like at 107. will that image get you to start saving? >> we're taking you into the

future. >> reporter: that's what dean and his team are betting on. they spent years developing face retirement. an application to plan retirement and its costs, wrinkles and all. it's not pretty. the goal is to motivate you to build a bigger nest egg. >> we had conversations about retirement and we couldn't get them to think ahead for the future and we invented an aging process to get them to think about the future. >> reporter: behind the shock value, there is some science. last year, researchers at stanford found young people who met their future self-were more likely to save. an average 30-year-old today needs a million dollars to retire by age 65. half of all millennials age 18 to 25 have nothing saved. it's no surprise that market is being flooded by companies trying to cash in on a sweet spot of how tensional retirees.

with 50,000 dollars to $250,000 in assets making up 2500 households. >> i think we need to be careful. not optimistic it is an inspiring and harshful message. >> reporter: how harsh it may be, it certainly gets you thinking. >> in its first few weeks, 150,000 people have already logged onto mer rim edge to see their retirement reality, however harsh that reality may be, it's too soon to see the effects it may have for bank america's bottom line. >> it's a good gimmick to get people to start thinking about what they're saving. >> when you log onto this system, it not only digitally ages you, something you can do on iphone, which tells you digitally what things cost. when i retire, the domestic airfare is very expensive.

$7 for a gallon of gas. >> $7 for a gallon of gas? >> who knows. >> why didn't you ask for an old tape of me. i can show you aging. it doesn't need to be digital. >> the problem is, even if we took a picture of you now. you wouldn't really age that much. you guys are eternal. >> i have to say, you don't look that deficit. >> i have to look pretty much -- >> are you going to show -- >> andrew is not here and that's a shame. we can do him. >> that's you. >> that's me. in case you didn't see it in the video. this is andrew. andrew wanted to make sure he got any lighting right in the picture. the middle picture is andrew if he ever retires. he's a workaholic. 107. still alive. he looks pretty good. >> if you're here at 107, not a

bad deal. it cracks me up he was worried about the lighting taking the picture. >> we went to several deficit cameras. >> is he too old to fail? >> too old to fail. >> i wonder if all my efforts by the time he's 107 he will have ever learned anything. i hope so. i may work on him that long. >> i hope we're still here to record that. >> i hope so. coming up, one of the most successful value investors, leon cooper man. we'll talk to him. this is america.

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hanging with mr. cooperman. hedge fund, titan and ceo of

omega advisor. can a shipping giant deliver for investors? inching closer with washington on the first quarter? i don't know. the second hour of squawkbox begins right now. >> good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick with joe kernan. andrew is out sick and hope he is better quickly. listening to plan bye-b huey. >> it was in the '60s and he has a new album plan. >> futures are higher even after the big gains we have seen.

dow closed up by 115 points yesterday. gains the day before. the s&p is up almost four points at this point. this is why we were playing plan b. those disagreements get louder and investors are taking that as good news. republicans are pushing a plan b to get over the first quarter and keeping bush era tax rates for those who earn a mil ylion dollars or less. the white house is pushing back against that idea. the white house came to the plate with $400,000 and below and those people would not see any increase in tax rates. there are a lot of maneuverings, each side saying the other's fiscal cliff solution is not balanced and a lot happening behind the scenes and we're getting to the real end of the year, december 19th, not a lot of time to make that happen and wall street saying, maybe there is some movement. and reuters is reporting a

final decision expected on google plus probe. it centered on the search practices. and more than half of catastrophe claims seen in 2011, that says the bulk of this year's total came from weather disasters from the united states, $25 billion from superstorm sandy alone. >> nike capital agreed in principle to be acquired by getgo on the cash portion of the bid. knight capital agreed. the cash portion a prior bid increased. $3.75 a share and knight ceo, tom yois, would have been the chairman, instead be executive chairman. our guest in the first hour, one

of wall street's most successful value investors continues to deliver for his clients. his fund is up 30% this year. joining us now, lee cooperman, chairman of omega advisories, delivering alpha advisory board and speaker, something we put on every year. i can hear all this stuff, i guess it was greatly exaggerated, the demise of investing and investing in general, and you can only get 5 or 6% if you're lucky and here you come in this past year with 30%. >> the year is not over. 7 1/2 trading days left and we're watching it closely. >> you've basically done this by staying positive for most of the year. >> positive most of the year and continuing mildly positive now, less positive than we have been. >> really? why on earth were you positive at the beginning of this year when everybody else was talking about europe, china, the

election, the slowdown. so many reasons to be negative. >> historically, bear markets precede recessions. you get the market down a lot and it's highly probable. we don't think recession is probable in 2012 and 2013. if you don't have recession, the market is such i don't think you go down a lot. the economy is creeping 2% growth rate and one thing that worries me, not out of the view, is the federal reserve has an environment there is no consensus to common stock. i may have a zero but bottom line, what do i do with money? keep it in cash, zero. the fed has told us it will be zero a couple more years. put it in u.s. government bonds, 1.8%. that's ridiculous. adjusted for taxes and

inflation, you get a negative return. rates don't belong where they are. we made a great deal of me on the last couple of years at high yield. it was 25% in '08 and 23.6% and credit markets are unusually tight because no particular bargain in high yield anymore. you're left with common stocks. you can find many common stocks yielding more than bonds and growing businesses and discount net asset value. by default, common stocks win. that's the way we've been playing it. the right view. we had other ancillary strategies. done well in credit, done well in stock picking. by having the correct view of the market, we had above average exposures to equities, which has worked. >> what causes a recession typically? a lot of people were saying -- >> i think going into 2013, there is probably 1 in 4, 1 in 5

chance. >> what causes it? >> i would say accelerating inflation and the fed tightening. >> the fed tightening. >> you see the fed tightening and told us we have to get to 6 1/2%. that may be a while. >> not any time soon. >> yeah. >> ultimately the markets will turn on us. if anything bothers me is the reality $20 trillion deficits and interest rates at zero are not sustainable prescription. we wake up and the markets will turn on us. we face that risk. we don't know whether it's 2014, 2016 event but somewhere out there. we hope we get the leadership in this country to deal with it before it becomes a crisis. >> deal with it how? what do you want to see? >> it's a combination. i don't disagree with raising taxes on high income people. i'm one of them and don't disagree with taxes.

and we have to deal with entitlements and health care costs and general expenditures. we have to have the political will to do what's got to be done. thus far we haven't. >> i look in a nutshell. let's say we're at 15% and spending 25%, there are people that would like to raise 25% and keep funding the government as it is now, maybe increase the government. most people, in a poll, would say, no, i like small government. when you actually pin them down, what do you not want that you're getting right now, they want everything they're getting right now. there are people that make the case the american people want 25% government spending. >> this was a defining election in the history of the country. it didn't go the way we were hoping it would go. we all both want the country to do well and hope the president does an exceptionally good job and if he does well the country will do well and we'll do well and we have to get down to business and deal with these

issues. if we don't, ultimately, we will have a problem. one of my favorite stories, a distinguished goldman sachs partner, i was with the firm 25 years, in the early '70s, the former secretary of the treasury left and joined goldman sachs, he was very good buddies with pete peterson, very sicivic-mind citizens and took out a one page ad in the "new york times" alerting people to the deficit. that was in the 1980s and it's much worse than back then, we have the worst deficit ever in the country. until we start feeling pain we will kick the can down the road and hopefully it will change and hopefully won't change until it's too late to do something about it. >> what will be the signs you're watching that will tell you the markets are starting to turn. right now, you're fully invested. >> pretty much fully invested.

we're very bottom up. i have to say, i'm trying to find a word to describe my view, i'm like a buffalo. could see it go up 10% next year, down 10%. more likely up and down because of the economy and because of the fed. we're in a condition we haven't seen in many years, half the stocks are yielding more than fixed income. you have to go back to 1998 to see that condition. it's great conservatism on the part of the investor because of the beating they took in 2008. you're still seeing liquidation. >> i saw a huge piece in the journal over everything that hit the individual investor over the past five years, people are saying the love for equities and the equity dreams, it's over. >> i don't think so. >> that was a positive article for the prospects of the future.

>> you have to doubt that. i feel comfortable with the statement. zero short term interest rates and 1.8% 10 year u.s. government bond rates have an implication for perspective terms for the bond market and telling you they're less than historical but i think superior than earning in interest income. in my bones, i feel over the next three or four years, you will have significant negative returns in bonds and make no sense. >> what would be the signs? >> dollar exchange rate hit and dollar weakening, not happening presently and zero rate inflation is another sign basicall basically. >> what got us and hit us hard in 2008 was the overleverage in the system and banking system. consumers were over11 valeverag housing too high.

the interest rate staying this low has helped everyone sort of at least de-leverage to some extent but have we transferred all that private sector leverage. >> to the public sector? we transferred it to the fed. it's still there. does it eventually mean our purchasing power the dollar has to go down. >> ultimately, there will be more inflation. >> everybody else is better. consumers are de-leverages, housing market de-leveraged. all these things that allow it to do well. corporate balance sheets de-leveraged. >> can you get the government to start this deal with its issues. i'm not one of these people that says it's not solvable. it's solvable. we have to give up a little bit suffering, some old time virtues. basically, it's solvable. simpson-bowles was start, the president's own commission. i think he has to move in that direction and hopefully we will before we have the crisis that forces it. we have evolved into a system of

leadership out of crisis. we don't have a crisis right now. we don't have the leadership. in 2008, they didn't get along like they don't get along now but they did what they had to do because they had a crisis. financial asset prizes don't discount a crisis. i'm not looking for the crisis to precipitate leadership. i want any leadership before the crisis. right now, my principle bullish nish is around 75 or 80 cents from companies. it motivates me. i like everybody else has to decide what to do with my d clients' money and my own money. you have to have cash because there's tail risks out there. i go to work everyday because i want to go to work and don't have to go to work and don't ever want to be in the position i have to go to work. >> we talk about what rates would be. up next, oracle shares jumping after the company boasted better than expected results. we'll talk about tech and stocks to watch after the break.

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welcome back, everybody. take a look at the futures, dow futures up by 34 points. moody says it may down grade alcoa because of a 20% drop in a aluminum prizes next yeces next could put the credit rating in junk category. lowering aluminum demand largely because of china's economic slowdown. >> let's look at stocks to watch this morning. first on the list, sirius x works, currently president of sales and operations, succeeding

m mel, who won't be renewing his current employment agreement. is he going to do anything? >> i don't know what he will do but i will follow him. he's a great ceo. >> if he has a chance to needle me, he will do it when watching me. telling me i'm out of the demo and it doesn't appeal to the older demo. you don't have it? >> i'm basically on the stingy side in terms of gadgets. i don't spend a lot of time in a car. and everybody that has it loves it but i have 3 1/2% position in my portfolio. >> you own the stock but don't use it? >> exactly. i don't spend much time in a car, in front of a computer. everybody that has the product loves it. i'm sorry to see mel go because he's a terrific ceo. >> i listen to really young things. all nations.

general mills, s of 86 cents above expectations of 79 cents, right in line. oracle, we told you, reported 64 cents, 3 cents above expectations, revenues was above consensus and forecast new software sales would rise 3-4% for the current quarter. oracle -- that's general mills. if you can bring up oracle. oracle has been a real shining spot in technology, got all the way to 8 and all the way back to the 30s. knight capital to be acquired by getco for $2 million. getco sweetened the cash portion of its cash and stock bid and beat out rival virtue. general electric has been removed from the key call list at ubs, saying an uncertain macro environment may result in weaker than expected earnings,

from ubs. health net says it will weaken in 2013 because of weakness in the commercial market. hertz global, cut iting it to 7.4%. and delphi automatotivautomoti., i have one more here, seeing ubs, remove iing general electr from its key call list. ubs agreed to pay a $1.5 billion fine for investigation of manipulating libor rates. how do you like that? kidding. kidding. ge owns 49% of this network. when i return, much more from leon cooperman, as we take a break. a look at the euro surging.

it's a 16 month high versus a yen and 7 1/2 month peak against the dollar. "squawk box" will be right back. coming up, can fedex deliver. the company expected to cut costs and clip its wings after a rough three months. the numbers and street's reaction just ahead. "squawk box" is back after a quick break.

would it matter at this point? let's get more from our guest host, lee cooperman. get a loan from him. not really. ceo omega advisories. a delivering advisory board member and speaker. what would you change if we go over the fiscal cliff? >> i think the market would correct 5 to 8% and be disappointing and me philosophically because it would indicate the inability to compromise and do what has to be done over the next four years of the president's second term. >> what if we went over the fiscal cliff and didn't fix it? what if we went over and stayed over, would that cause a recession? >> i would say so. >> you're assuming that won't last. it would be more than 8%.

>> i think we have to, if the stock markets start getting riled, politicians will wake up and do what they have to do. just a darned shame they can't do what they have to do now before they precipitate -- jeff immeld say it has gotten soft because of the uncertainty surrounding the cliff. >> you want to talk about bubble s? >> you mentioned the tech bubble in your previous comment. i was looking at numbers i find interesting. in 2000, cisco was selling at 100 times earning, had nobody recommending it and had no yield income and dividend dents at 6 1/2%. this morning, cisco less than 10 times earnings yields 3% and 10 year governments are 1.8% down from 6 1/2. 3% substantially over 10 year

government bond rates. the government isn't an equity market, in my opinion a 10 year yield equity market. >> do you like cisco? >> we don't own it. we own qualcomm, we own sprint, googl google. >> you don't own apple? >> we did own apple. we did very well in it. we had a position through options but much smaller than it was. there are questions, issues. i'm not keen on their financial management, in terms of sitting on all that cash, earning zero. i think we should be more creative and innovative. a great company and great product. i have an iphone 5 and very pleased with it. i have an ipad. i'm not a big technology -- >> it got the cisco market cap, only 15 times earnings. got back wasn't 100 times earnings. >> that's a deficit business. a google model is more enduring, apple making hardware sales. >> what made you get out?

>> we respect the market and understand the issue. >> you didn't get out of the top? >> we didn't get out of the top. >> where it is right now? >> we actually just yesterday re-established a position. >> you did. you got out above this. >> i doesn't own it but thought at 250. >> if we ever get out at the top or in at the bottom, it's sheer luck. >> if you're somewhere 22700 and and -- between 700 and -- >> we got out . >> since we don't run a leveraged fund we have plenty of borrowing capacity and sold some puts to create the stock at low levels. >> we will continue this conversation with lee. he's here for the rest of the hour. if you have any questions,

e-mail us @"squawk" cnbc.com. steve lgets up to speed on what the latest situation is. ♪ ...could end with adding a close friend. the lexus december to remember sales event is on. this is the pursuit of perfection. [ penélope ] i found the best cafe in the world.

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welcome back, everybody. >> take a look at fedex at 1 shrine versus 149 the street is looking at now. >> revenue is $1.4 billion. the federal express segment was $6.86 billion, the ground segment revenue. $2.59 billion. the number people were looking at for revenue was below so that's above. it is a little bit higher now. we will look for guidance. >> sandy had an impact by 11 cents a share and reduced shipment volumes and incremental operating costs. >> the new guidance quarter is

below the high end. it backs fiscal earnings per share 6620 to 660! that's in between. what's the stock doing right now, can we tell? not much. >> they said operating income for the quarter improved in fedex freight and ground because of increased volumes and higher yields. persistent weakness in the global economy and increased demand for yielding limited the profits at fedex express. a couple deficit situations adding up. superstorm sandy, i didn't realize they would have that kind of impact on the company. 11 cents a share because of that. >> for the next quarter a little below. for the year, it looks pretty good. i don't imagine people would be saying, wow, the company is

negative about the fiscal cliff. >> oracle's numbers yesterday were pretty -- >> right. excellent. we'll keep an eye on it at this point. we will talk to an analyst. >> we will talk to bart in a couple minutes. >> we'll have an mcco in. in the headlines, we're an hour away from the latest housing markets. november rate is expected to fall to 865,000 units following a 6% increase in october. mortgage applications dropped by 12.3% last week. applications are at their lowest of the month although they're above record lows. as we've been talking about, ubs will pay fines in the libor case.

and switzerland was fined $450 million in connection with the libor case back in june. other banks are expected to be fined in coming months. as we've been discussing all week long, president obama and speaker boehner appear to be inching towards a deal. house republicans are now pitching a plan b in case talks feel. steve liesman is here with more on where we stand on a possible deal. have you talked to any since yesterday or have you just been musing and thinking with that big brain pan of yours. >> no. mostly i've been sleeping and drinking. >> we assume that. >> as you know, i've been on the phone pretty consistently since leaving the "squawk" set yesterday. i want to preface what i'm about to report. this is about the hardest thing i've done. i think i've reported really complicated stories, t.a.r.p. and securities in the fiscal

cliff and fiscal crisis, explaining where they are is like a football game and the lights have been turned down and you have to guess where they are. my second chart, i have never done this before, i know the second chart is wrong but it's the only way to present to you where the sides are. let's start off with what i think is right, the revenue side and i think they're pretty close. tax increases, dems ahead of republicans, 600-460. i have to say the republican side requires me to make certain assumptions i have run by the gop side and they tell me are not far off. if i look at deductions versus tax increase, it could end up being 50/50. hard to tell where it is right now. the estate tax, democrats have $100 billion in revenue right there. i don't think the republicans are on board with that at all. note the deficit definitions of the differences. the gop says that the democratic

revenue number is actually higher because of a change in the cpi. go to the right hand side of that column. either 200 or 300 apart on revenue. not the worst thing in the world. go to this next chart, the fiscal cliff interferences when it comes to spending. folks, i have no idea if this is correct. the red numbers from the gop are numbers sent to me on friday. the 1.4 trillion was the total of these numbers on friday. as you know, boehner is talking about a trillion. go through it, cpi changes, they have deficit numbers because democrats want to take some of the edge off of the effect in the change of the cpi for the poor and elderly. health savings, we think they may be talking about means testing for medicare. other savings or administmandat savings, we think the gop is talking about social security and obama administration means discretionary spending and

defense spending inside their amount there. we know it is wrong but don't know how it breaks down. let's look at possible differences or places for savings. what you will find, means testing for medicare is on the table. agricultural subsidies, something the democrats want to target. additional discretionary defense cuts and raising retirement age, we think saves about $100 billion. take a deep breath, total it all up, show you what we've got. revenue. 1.2 trillion for dems. assuming you use the democrats definition where tai are. >> i have a question. for raising the retirement age, that's not anything that's going to happen in the next 10 years, right? talking about doing this way down the road? >> further down the road. >> these aren't savings you'll see in the next 10 years. >> you're right. it would not be within the budget window, a correction right there.

>> not that complicated, just want to follow along. >> 2$2.4 trillion for the dems and 1$1.9 for gop. it's the spending side. the revenue, seems like they're a lot closer than they were and maybe joe knows better the difference between 400 thousand a million, is that an unbridgeable gap if you hit 750? that's the best i can do. >> the trillion of debt and it will wipe out the savings. they have to send out a simple question. what should the maximum tax rate be on wealthy people. i believe in a progressive income tax structure and wealththy people should get more. the major part of the income they get is from wealthy people. and you determine the tax size and determines the revenue

yield. we're nowhere near that. we have to get health care costs under control, raise social security retirement age. >> we have to also -- to get a number, you need to get rid of all the noise and all the deductions. that's why tax reform would be important to get a number the rich are actually paying. >> i have no problem with that. the marginal tax rates are the big question. >> you need a tax rate that's real. >> great idea, leon, except you've got 12 days, buddy. >> we're going to fix this. we're not going over the cliff. if we go over the cliff, we'll fix it in january. >> how do we fix it? that's the question. you're right, i'm a little short term. i completely agree with all your long term ideas. what you have to do to fix this in the next 12 days is deal with those numbers i came up with or maybe the plan b is the way to go. >> we're somewhere around 6 or 800 billion off. that's the difference. remember, 400 billion is what killed us last -- the deal we

almost did. the difference is twice as much. you're already hearing carping, i understand from the conservatives and from the dems about even the -- >> are you more-or-less optimistic now after we reported those deals from yesterday? >> i'm with you. i think they can do it. i think they'll find something. >> you think they can do it. >> i do. i hope so. >> wait a minute, steve. you bring up plan b as if that's something that might go through. harry reid said that's not passing the senate. harry reid said plan b keeps all the sequestration cuts. >> that will be kept if we go over the cliff. >> yesterday, geithner was strong saying it could lead to potential down grade of the united states. you think of why the s&p down grade of the united states, it was political dysfunctionality. this would just prove it. if all they do is plan b, it will show we cannot make a deal, even faced with that kind of

sequestration and they will have been proven correct on that. it's a real possibility because if they don't come together on spending things, i think op boehner's thing on revenue of $1 trillion as a request to obama. i think boehner is asking obama maybe i can get you $1 trillion in revenue. you have to give me something on spending. it's like a bridge, you say 2 of clubs, show me what you have, partner, give me something so we can get to game. i think that's what's happening here. >> we need to know whether the president really wants to -- some look at these ulterior motives he wants to go over the cliff. >> yikes. >> i would tend to doubt that. he's willing to do that, because this public will blame the republicans. harry truman says the buck stops here. if we go over the cliff the president's leadership can't bring us together, along with

congress, they're all a bunch of bums if they don't do it. >> our polling backs us up, we're the only station that asks people, would you blame both? the public says they blame both. faced with only democrats or republicans, they said republicans but they said they would blame both. >> you spend too much time away from us on the phone. you can start making more calls. you got a line into boehner yet? never mind. don't answer that. this is harder than reporting on russian politics? >> russian politics was easy. >> all you had to do was learn russian. >> it was always the opposite. that was easy. quick mention, knight capital and getco have now confirmed -- thank you. thank you. have now confirmed their agreement to merge. done. knight's value at $3.70 a share. and instagram and twitter,

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welcome back, everybody. checking the futures, dow up by 3 points. on the ongoing supremacy battle between facebook and twitter. facebook's instagram disallowed allow i allowing photos to twitter and in return, twitter is changing things similar to instagram, making pictures black and white. instagram exceeded twitter in daily users and the two have been sparring for the same advertisers. co-founder was originally an

investor in instagram and once sought to buy the company. >> you ever tried to put a photo on twitter? >> i have. >> i don't. i don't know how. >> you're afraid, aren't you? >> they've learned how to do it in black and white. that's an advance. >> honestly, i don't use instagram, i use twitter. >> when tvs went from black and white to color, that was the right direction. now we're going -- >> in reverse. >> that's a feature, to make it look avant-garde? >> really cool. you don't even know what i'm talking about. >> i like to be anonymous. >> right. putting a photo on -- i look at every word, i spell something when i tweet or i'm going to do something wrong. i'm so afraid. i have 200 tweets in eight months. >> never put you in that category of being too afraid. >> this is -- i have a 17,200

followers. they get nothing from me. i don't know why they follow me. i really don't. i don't. >> i get 450 e-mails a day. >> wow. >> a lot of spam. >> no. e-mails. it happens basically, wall street, i have a beef with the sec. i think it's important that the brokers be profitable. the reason the liquidity left the market, there's no money in trading stocks anymore. commission rates, you can trade for a penny a share. what's happened, wall street firms don't want to pay for postage and paper and print iin and distribute research via e-mail. if you want a hard copy. i'm old-fashioned, like to read the hard copy with a cup of coffee whatever, hit the print button, your paper and fax. the thing that's really nuts, i love lloyd blankfine, a terrific ceo and goldman sachs will give you research and maybe one page of research and nine pages of

disclaimer disclaimers. >> disclosures. >> why don't we send two pdfs, one with research, one with disclosures. we know there are conflicts, we accept that. i have a son who has a phd degree, an environmentalist. if he knew how many pages we are printing. >> i will show you how to print one page. >> you know how to do that? >> yes. i will fix it on the break for him. >> don't teach me how to put a photo on my twitter. >> i won't. when we come back, omega advisories and ceo charmed leon cooperman and we will see what he's watching in 2013. 26 points above fair value. we'll be right back. in the next hour we welcome ceo ralph slochlossstein.

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welcome back, everybody. fedex reporting second quarter results a few minutes ago. art hatfield joins us from memphis, a transportation

analyst with raymond james. they came in a little short this quarter but the guidance for the year is a little high. what's the key take away as the stock is trading higher? >> it would remain the same. i think it's difficult for them to be anywhere but at the low end of that range given the guidance they gave for the fiscal third quarter, they guided to a rang of 1.35 to 1.45, below where the street is. unless things pick up in the fiscal fourth quarter, it's difficult to be anywhere but at the low end of that range. they're dealing with ships away from express services to more deferred services and that's hampering revenue growth and margin improvement at this point in time. >> why is the stock trading higher at this time, do you think? >> it will take time for people to looking through their numbers and look at the outlook. one of the key things for this story is what kind of progress

are they making on their so-called restructuring or cost containment programses. they have an initiative to improve profitability by $1.7 billion on an annualized basis. today, they're saying they're making progress on that. we need to keep in mind the full benefits of that are still two years away. i think the market may be getting ahead of itself a little bit and not realize in the near term, earnings are probably going to be tough for them to show real strong earnings growth. they will be okay. unless the economy gets better, it will be a difficult earning environment the next couple quarter quarters. >> you're skeptical on the stock? >> i'm skeptical the way it's trading this morning. as people get through the call and look where we're at over the next couple quarters, we may see the stock sell off a little bit. >> thank you for joining us this morning. >> you're welcome. let's get final thoughts from our guest host this hour, lee cooperman, chairman of lee

advisors and chairman and ceo of saks management. for 2013, you have talked about you think overall, the market is likely to go up than down. >> you asked when what i'm watching in china, european economy. a good plus for the economy is home prizes are starting to strengthen a bit and home sales picking up. the banking system is extremely liquid. gasoline prizes six or eight months ago were 3.$3.80 a gallo and the last i saw was $3.30 a gallon. that's a plus and watch inflation and overall retail sales. to get the market down, you need a recessionary environment. it does not look recessionary at the moment. if we can't get the right leadership out of washington, we go over the cliff, no fix, we could wind up with a recession. >> that's the one thing that

could screw this up? >> i don't think it's logical. it would be a bad signal to the world we can't govern ourselves. in a couple months the debt ceiling comes into play and if you can't resolve the cliff problems, the debt problems linger. why put the economy through the winger and scare them and then fix it. >> you would also like to see serious changes take place. if this just gets kicked down the road- >> as i said before, i thi think -- i think roughly 70% of tax revenues to the government are coming from wealthy people. let's sit down, republicans and democrats and have an intelligent conversation, what should the maximum marginal tax rate be. mr. buffet, i have enormous respect for warn. he said if you make over a million or 35 or 40%, i can live with that. take that marginal tax rate and

determine your dwreeld to the government and let's size the government to that revenue yield. we're just kidding ourselves. it's just not a revenue problem we have a cost problem. >> a straight analysis like that is not likely to come out of washington, right? >> ultimately, it has to. you have to live within your means. the market is not forcing that right now, around the world, everyone is in a race to the bottom. we have to ultimately get there. the question, will we get there with a crisis or without a crisis. i want to get there without a crisis, i'm not a good crisis investor, i tend to be more long oriented. >> nice to have you here. coming up, power players and their take on the fiscal cliff. ralph hutchins and and ralph schlosstein. [ penélope ] i found the best cafe in the world.

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and where the staff is exceptionally friendly. ♪ nespresso. what else? avoiding fiscal disaster. speak speaker boehner has a plan. >> our plan b would protect american taxpayers who make a million dollars or less. >> we will have two ceos to join

us to tackle debt negotiations. the third hour of "squawk box" begins right now. @ welcome back. it keeps happening. i'm having a conversation and here you are. give me a second! no, i'm kidding. welcome to "squawk box," first in business worldwide. i'm joe kernen and becky quick. andrew sorkin is off today. i'm here with ralph schlosstein. do you have to go slow with that? >> it's tough. >> first, steve liesman joins us. i told him to make a phone call with breaking news. steve. >> make a phone call, like de niro, right? >> yeah. >> treasury saying it's going to exit its total ownership of gm

in the next 12 to 15 months in two methods. in the first method it will have gm purchase $200 million of shares at $27.50. in the second, the remaining 300 million shares will be sold in an orderly fashion over the next 12-15 months quote subject to market conditions, it will begin the disposition as soon as january 2013 through a pre-arranged written trading plan. that will exit treasury or the u.s. government from its position. remember, that came out through the t.a.r.p. program about five years ago at a controversial investment in the auto industry. the treasury saying that overall to date, repayments and income through t.a.r.p. has recovered over 90% of the $418 billion it dispersed through t.a.r.p. this will obviously help out quite a bit. 200 million shares will be purchased by gm at $27.50, the other 300 million sold through a

pre-arranged written trading plan over the next 12-15 months. i guess that's a bit above market, that 2$27.50, if we're doing $27.23. i don't know. is that a live chart we're looking at, joe? >> it is. trading up on that news. a 7.9% premium above yesterday. it closed yesterday at 29.49. the stock is up on that news and a premium from where it closed. >> i wonder now that the election is over, we will lock in a loss. phil is on the line. we needed to get back to what? m >> you needed to trade at 54 to cover all your investments. if you're not selling at 54, selling at $27.50, basically 50 cents on the dollar of the investment you needed to sell. it doesn't mean overall the government won't give only half the money back it sunk into

general motors. it is well short of what they needed to sell. >> it will be good for gm. i talk antidotally. there are still people going to ford and saying i'm going to ford and don't like the government's moniker on gm, not looking whether the cars are good, have something against buying gm because of the bailout. >> absolutely. that has been a cloud over sales since the first time the government invested on the company. another aspect often overlooked, comes down do how general motors operates its business. they have long felt they need complete autonomy. it's not that the government was telling them what to do. it wasn't telling dan ackerson how to run his company. you guys understand you couldn't do simple things like, hey, we want to charter a jet in order to go and make a deal. you can't do that. you had to fly commercial. people sit there and say, that's a little thing.

the bottom line is this. if you cannot run your company feeling you have complete autonomy, it becomes much more difficult to make the kind of strategic decisions you want to make, at least that's the position of the gm executive and they are welcoming this news. >> they wanted to do this. they could have done this a long time ago. the government wouldn't take $27.50, right? >> exactly. a lot of people said, listen, as long as you're holding this stake and you're fairly confident general motors will continue to rack up the profits it's racking up. remember, we're looking at gm having ids sect or third most -- having its second or third most profitable year ever in 2012. if that's not the case, why not hang onto the stake? the flip side is the longer it drags on the longer it continues to fester as a problem for general motors and headache the treasury department didn't want and said at the end of the day, let's unload. >> do you remember when there

were engines being made in china or somewhere abroad? did they bring them back here? did they keep more distributors open or autodealers open than they really wanted to for political reasons? there are a lot of things they pointed to politically incorrect things they couldn't do. is that part of it? >> i don't think there was ever a decision they made they made it strictly because the government has a stake here. when you look at all the restructuring done by all the automakers, particularly gm and chrysler, when it comes to closing the dealerships, they started with a grandiose plan, we will close so many dealerships, it will make us much more efficient and drive the profit through the dealerships much more. >> there's a congresswoman man every district where one is getting closed. >> absolutely. for the longest time, that has been a complaint at general motors, that the government they never said you are doing this

and that, the government has always been the big brother looming over the shoulders. >> will the volt -- will they still make that thing? >> absolutely. >> they will? >> absolutely. >> that's a government -- that's a government subsidy that allows that to even be sold, doesn't it? >> that's all electric vehicles. all electric evacuation. doesn't matter who you are, if you sell an electric vehicle, you will get the federal tax rebate. dan ackerson and his team believe in electric technology in terms of electrification of vehicles. that's a separate debate whether that will pan out. they do believe that is the future of the automotive industry. that is not going away. >> some natural gas cars might be an idea, don't you think? >> yes. they will tell you they are working on that. >> $2 -- i mean, yeah -- >> but you have to have the filling stations and infrastructure to go along before it makes sense. a chicken and egg question.

>> if we're doing long term stuff it will never pan out. this will pan out with what we have with natural gas. anything else, phil or steve? steve, i thought you had a deal on the fiscal cliff. you have nothing? >> sorry. i do have calls out as you instructed. >> i thought you made a call, breaking news and put you on. >> i came back with 220 million times $7.50, that has to help us, the little bit of money i came back with, if you think about it. >> right. i was thinking if it had a gain on it maybe the government would have been taking its gain before capital gains. that's not it. >> it's the government. that doesn't quite work. have two guys who are so smart at this stuff. thank you. >> i am curious why it's trading up. seems maybe phil is around, i know you have to go, it's hanging like a cliff here, this idea the shares were out there, taking that 200 off the market, putting it at the bank at the gm

treasury, maybe that's a relief to the market. >> why wouldn't it be trading up if you sell it at gm at $27.50. >> that's the government selling. you don't get to sell it in the market, i don't think. go ahead, phil. sorry. >> i think a lot of investors for a long time have said, listen, once the government starts to exit general motors, you will see at a minimum, a relief rally. at a very optimistic rally, you will say these shares are going to start to pop. i'm not in the camp they will pop but i think we're in the relief rally. >> one thing they have done well, the treasury has done sales in a way attentive to the market. this idea of 12-15 months as market conditions dictate. that has to be a relief how they're doing it instead of dumping it in a politically charged sale. >> has any at gm going to be affected by the 400 -- does any make over $400,000, maybe all

these people get a tax break. is there any executive compensation over 400 grand at gm right now? >> yeah. i believe there is. >> there is? >> that's her to aspect. if they wanted to go out and hire a new executive, bring somebody in from a competitor or other industry, you had to have the governor sign off on that. it's tough enough in this day and age when it comes to competition to hire any executive in a very competitive market and say to the government, let me get your okay for the pay package. they will be glad to have that off their shoulders. even a millionaire or billionaire who makes $500,000 a year? >> over a certain level. >> that's what we call those guys. >> you need to get approval. >> we call those guys millionaires and billionaires. thanks, phil and steve. see, ralph, i can get in little digs. >> no prompting. >> no prompting, right. >> i'm having trouble making the math right. >> on the deal. >> how many years it takes

$400,000 to equal a billion. >> don't ask me. ask your guy. he calls him that, anyway. >> we have been talking about that fiscal cliff. a lot of people watching what's happening in washington. negotiations continue and we are all trying to figure out what's happening at this point. house republicans have announced plan b, that's in case the talks fail. that plan b would move to pass their own tax bills and automatic budget cuts set to happen next month. actually, it would not avert the automatic budget cuts. that would still be in there. from everything we heard, the automatic sequestration budget cuts would continue. it would only avert the tax portion of that and extend low tax rates except on those with incomes a million dollars and above. president obama's latest position puts the threshold at $400,000. no one is expecting the gop bill will pass the democratic senate. harry reid saying it won't. each side continuing to say the other's fiscal cliff positions are not balanced. we have watched the markets and

they have thrown through this rhetoric. the dow futures are up after yesterday gaining the day before that, too. overseas in asia, you saw gains in tokyo, that market up 2.4%, the nikkei above 10,000 for the first time in march. in europe we see green arrows. the biggest gainer is in france, up a half percent and the same story with the ftse in london. our two investors, ralph schlosstein and ceo and blackrock co-founder and glenn hutchins co-founder of silver lake partners. and also joining us is congressman steve israel chairman of the democratic congressional campaign. i don't know how long it takes to become a billionaire, how long does it take? >> a lifetime. >> since we have the congressman with us, i know you have to run, congressman, tell us where we

stand now. we heard about this plan b. do you purely view that as what we see often, a stalking horse in washington? do you think boehner and the president can actually get together and work out a deal before christmas or before the 1st? >> yes to both questions. a few weeks ago, i met with some ceos connected with fix the debt. they said to me a bad deal would be worse than no deal. what speaker boehner has done with plan b is combine the worst elements of a bad deal and no deal. no deal because it does nothing to avoid the fiscal cliff and puts us right back to where we were in january. doesn't do anything on long term debt problems, does nothing with respect to entitlement reform. it's a bad deal. it's no deal because all it does is generate $270 billion in revenues on a $2 trillion debt problem. let's get together. the speaker's putting out this

stunt, let's let that pass, get together, let's get real and get a deal before we leave. i think where both parties i hope are headed in the right direction. >> both of you gentlemen have more than just a casual interest in this. you've been part of the whole process. what do you think, glenn? start with you. >> two things. one, i think it's absolutely vital to get a transaction done. it's not sufficient but necessary to begin the process of real recovery in our economy, get the uncertainty behind us and have the country on a path of fiscal santi. that's really really important. the second thing, the two sides are very very close. >> a good week. >> i've gone from big spread on taxes was a trillion and trillion-two. >> do you think boehner has given up more? >> i don't think so. i don't think it's good to look at it that way, unconstructive.

>> i think they both moved. number one, there is no real plan b. this is like, you're sick, you need five drugs and an operation. they say, okay, you can have one drug. it doesn't solve anything. whether plan b is at a million dollars or the bill that passed the senate at $250,000, it doesn't do what needs to be done. >> plan b basically kicks it down the road, does not deal with the caribbean expenditures >> doesn't address the debt ceiling or expenditures no one wants. >> it says we will use the debt ceiling. >> that was a disaster, july-august of last year was a disaster. >> can both sides deliver, congressman, if they do get a deal, do you think boehner can deliver it with his guys and the president can apiece -- apiece -- he -- can appease, he has people way left of where he

is now. >> people are willing to compromise, yes. on our side, the president has put tough medicine in there many democrats would have a problem accepting like a chained cpi, a reduction ultimately in social security benefits. i would say this, we are prepared to work on a compromise, as long as it is based on fairness, big, bold, balanced, we will consider almost anything. what republicans need to do is learn how to take yes for an answer. let me say one other thing. i am very pleased that the president has moved off the $250,000 threshold or income and now at $450,000. i've been critical of that position. $250,000 may make you rich in some areas of the country. >> billionaire. >> does not make you rich on long island and in new york. bottom line is the president was at $250, now, he's at 400. boehner was at zero, now at a million. we can find a compromise somewhere in between. >> tell the people they've got to start complaining about that a little bit more.

both sides need to be complaining a lot. right now, i'm hearing more complaining from boehner's side and makes me think you're putting one over on him. we need more complaining and get together and they have to really be complaining for us to think the deal is going to come together. can you do that? >> look, i've been very critical of the positions up to now on $250,000. >> i know. you're in new york, congressman, you know. >> i get complaints but we need compromise. we're ready to compromise, the president has shown compromise. we need somebody to compromise with and something to compromise over. >> i want to emphasize something i said earlier, we are within spitting distance of a transaction. it might not be $4 trillion but it's pretty close depending what numbers you add up. what we should be doing, i'm part of the fix the debt group in addition to folks at the white house he consulted with in the press. we should allow for them to get

a transaction. whether than losers and winners, get in the room, we know you will get in a zone of discomfort and hold your nose in the last trade, that's where you get the deal done and go get it done. that's the message we should give. >> congressman israel, thank you. you gentlemen will be with us the rest of -- how much time do we have? 43 minutes. when we come back, "time" magazine naming barack obama as 2013 person of the year. find out why. and pole yove picks for 2013 and check out the smaub market indicator.

welcome back to "squawk box." futures right now indicated up to 33. it's been a pretty good market for the last two weeks or so. "time" magazine is unveiling its person of the year, a man of the year this year, we can call it a personal, the person is pc. it's the president. the honor going to president obama. time writes we're in then midst of historical cultural and

demographic changes and barack obama is in some ways the symbol and some ways the architect of this new america. in 2012, he found and forged a new majority. he turned weakness into opportunity and sought, amid great adversity to create what time says is a more perfect union. ubs hit with a $1.5 billion fine. and manipulation by dozens of staff. the agreement was agreed to with u.s. and swiss regulators. they should have dean this earlier, barkleys only get hit for $250 million, you wait too long and end up with $1.5. barclays was hit back in june. the second largest fine ever only by hsbc $1.9 billion

penalty agreed to, to settle the laundering probe, u.s. probe into laundering money. and, if you haven't heard yet, we want to let you know, getco is doing it, beat iing ou and values knight at $3.75 a share. sirius xm radio has appointed jim meyer ceo. becky's hair is falling down a little bit. when women move their hair like that, it's something people need to see. >> thank you. appreciate that. >> a good luck. >> on walt thl street, that wou have been a fat finger trade. and the market down 80 points. here, we took the wrong camera. and replacing mel karmazin. and that picture has to be 20

years old because that picture doesn't look nearly that young. dating him. the government's latest housing starts data expecting 865,000 down from october. where should you put your money in the new year? david herro on the best bets for your money. [ male announcer ] this is joe woods' first day of work.

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welcome back. kodak has announced the sale of its digital patent portfolio at $525 million. the buy er is intellectual ventures and the seller agrees to financing for kodak's plan to emerge from bankruptcy. a bankruptcy judge still has to approve the deal. when we come back -- >> when did i say that? 30 seconds? will you please return my barmitsvah picture? i will send you a new photo at the appropriate time. he admits that is classic. we have breaking news in housing starts. stick around. [ penélope ] i found the best cafe in the world.

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we are seconds away for housing starts for november. rick santelli standing by. please. >> 861,000, seasonally annualized and adjusted in terms of those units. 861,000 is down about what, 3%? from a revised 888,000. originally 894, moved to 888 and

our comp, moved to 861. let's look at permits. under 900,000. 899,000. that is an increase, a little larger than the decrease we saw on the starts, up 3.5, about 3.5% or so. that's coming off minus 2.5%, also subtly revised. i guess if you take a step back, consider this. the 888,000 we had last time, even with this revision is the best number since july of '08. this one obviously deteriorates a bit. but you get the picture. most of the housing data, investor sentiment, there is improvement. but we're coming from a fairly low comp back a few years ago. pre-opening equities strong, dollar index is down. it's not only down because of the euro and the pound, but this is negating some what the big

gains against the yen. that has been a huge move. >> thanks. back to our guest host, glenn hutchins and ralph schlosstein. we've been talking about the fiscal cliff and what this means and i know you're both very concerned about what's happening with the negotiations. glen, you said you want to see it get done to see what we can get done and that we can govern ourselves. >> if you look what's on the table right now or where the spread is, there are details really important. if they can move toward the middle we have a deal that makes a lot of sense, a nice balance, include the budget control act, spending cuts to new revenues, and a deal that creates conditions for corporate tax reform i think is a very important next step. you have a process that -- you have a process that will be in place that will make these things binding and reliable to

the markets. >> you said corporate tax reform. >> do you think it's 2.5? >> i have talked to people, if you include the budget control cuts from last year, depends -- >> not really -- >> it will make everyone feel a lot better if they really thought it was 2.5-1. >> it's already 1$1.2 trillion that's been done in the budget control act. >> as a wind down to the wars? >> that's something deficit. >> these are real cuts. even if you take a trillion or a trillion-two, you will pined up with something like 2.2 or 2.4 in budget cuts and 1 to 1.2. that's the bid ask. >> there's not a republican in the world that thinks that way. you hear what they're saying, they don't think the president is coming to the table, just hyp hype. >> i understand that. the problem we have here, is unfortunately, our political system is a little warped at this moment. you look at the republicans,

this is not a criticism of them. 88% of the republicans were elected in districts where they won 55% or more. the same is true almost of the democrats. >> you're talking about in the house? >> in the house. in these, for these congressman and the senators, the primary is the election, not the general election. so if you're sitting there as mitch mcconnell, you know, his greatest worry is not that he can win re-election versus the democrat, but he's going to be primaried on the right. unfortunately, your phrase, "rise above" is what we really need here, because the country, business leaders, the economy, desperately needs certainty and a comprehensive solution, not a plan b. >> did you know we will now use that as a sound -- we will have a commercial where we have ralph saying what we really need is

rise above? did you do that on purpose to live on forever after you leave the show? >> joe, that was my goal coming on today. >> that will work! you do it, too. you say what we need to do is rise above. >> becky and i will quite easily be able to rise above this conversation. there's another point to be made here, which is that everybody wanted a big bang here, $4 trillion this time and we have to do that or nothing and the smaller deal lacks credibility. you look back at the '90s, when ralph and i were involved in "t the carter -- clinton administration, we had three steps that got us to the balanced budget. andrews air force deal under bush, the first clinton budget, and then you had the '96 budget deal. those things added up to the successes that we came out with out of the office with in 2000. right now, if you get to this deal, 2$2.4 trillion, rough numbers, where we are today, you think about the 4$4.2 trillion e have in the bank from what we did last year, get yourself to

place you stabilize the debt at 75% and stabilize the new debt at 3% of gdp and don't bust that until 10 years from now, 2021 or '22, that's a really good deal and might take a third step. i think it's an excellent place. >> you think this gets us to a steppingstone for corporate tax reform and did not say individual tax reform. >> i think both. the key here is we need to get some points on the board and momentum. is there a ton to do here. we need to do individual tax reform. we need to do corporate tax reform and we need to do en enlement reform. all three. all three are critical to getting a comprehensive solution. we need a little momentum. if we end this process with a plan b, whether it's at $250 or a mil ylion, it doesn't matter. we will be back.

not the thing about plan b, the concern is if you get a little momentum and go a little way towards solving the problem or decent amount towards solving the problem, you put the critical element of we need something done now, you push that off and the concern is you don't tackle entitlement. >> i disagree with that and you raise a really good point. one is there is a lot of momentum for corporate tax reform independent of this deal by both sides of the aisle. the good thing about this transaction, if it gets the revenue we need, you can do revenue neutral tax reform and becomes easier to do. you take the revenue out and take what they call extenders out, the difference between obama proposals and camp proposals are not that great. as i understand it, they have agreed how to measure it all on both sides. you have a lot of momentum to getting that done. that's the important thing. this deal would do, as i understand it and details

haven't worked out, so it could change between now and then, it would give you revenue targets and spending targets today to be replaced by real reforms tomorrow in a process to get it to reforms. if you didn't, you'd be at the backstop backstops. >> there is a carrot and stick part of the approach? >> exactly. >> the other thing that hasn't gotten as much publicity, both sides in their proposals have included extending all of these corporate tax incentives, indeed tax credit and others have been annually discussed. so what that means is there is a high amount of tax expenditures in the corporate code which makes it more possible to do broadening the base and lowering the rates. so both sides have set it up. >> you don't have need for revenue, then you have the conditions for real reform. do you agree with that? >> i agree.

>> as hard as it is to avoid this calamity and get people, once we do focus on entitlement reform, the two parties, how far apart are they? >> may have a revenue number, spending cut in place. >> for down the road? >> that will be in this deal. >> when we actually do decide to tackle that entitlement reform, how far apart are the two sides? >> entitlement reform is the toughest of all the things to do, because, let's be honest -- >> we decide what kind of country we want. >> both parties have chosen a path of not paying for all the government that they want to have. that's true of both parties. >> obama-care, even though we have those numbers, david walker says that's 12 trillion. >> health care is a massive problem going forward, whether obama-care. >> who a's on the way to

entitlement reform. >> you have seen some proposals i think could close the gap, looking at medicare, you know, greater contribution rates from upper income people. i think there are -- let's not forget that medicare is a program where the average person has paid roughly $125,000 of premium and has gotten back over $400,000 of benefit. now, we can -- we may choose to do that for people of little or no means. but we really don't need to do that for people around this table. >> >> you say raising contributions versus means testing. >> or means testing, either one. >> let's be clear about this. as i understand it, the deal on the table has $400 billion coming out of health and $130 billion coming from chain to cpi. that's $530 billion on the table cut from the entitlements programs.

>> but republican complaints have been they don't know where it comes from and very vague. >> of course. there's a political hot potato i don't understand as well as those guys do. that's on the table from this administration. two ways to accomplish that. one is you get to the end of the process and take the cuts because you agreed to it. the other is, between now and then, whatever your fail safe date is, you then agree on real reforms that can get you the same amount. if this deal were agreed to, you'd start with $530 billion coming out of entitlements, part of this transaction. you need to remember that. >> you like my pen. >> if i was you, i wouldn't be showing that. >> viagra will not be covered. >> this guy has been waving his viagra pen in my face all day. >> you think i'm waving, wish i was waving. >> becky, i don't know how you do it. >> leave me out of this. >> coming up, we continue our what's working series with we're

rising above. what's the problem. >> i think we're sinking below. investment ideas for the new year, david herro. he will tell us how stocks in japan will be a better buy that u.s. equitieses, a hard sell. ♪ [ engine revs ] ♪

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we are taking a look ahead at stocks to watch for 2013. david herro joins us to talk investments outside the united states. he immigration the five star oak park international fund that recently celebrated its 20th anniversary. he has been with the fund since 1992 and named international stock fund of the decade from 2000 to 2009. thank you for joining us this morning. >> good morning. >> i know you say stocks are still the best place to be putting your money, the same thing we heard from lee cooperman earlier this morning. you say places like japan are a better place to invest than the united states. why is that? >> you look at valuation differentials, we're a long term value investor and a good quality stock is one of good quality selling at a low price. the japanese stock market has lagged. we're starting to see things that will help corporate japan

improve its profitability and at this time, the weakening yen. japan is full of exporters and a supply chain that supports those exporters and have been clobbered by a strong yen over the last two or three years and starting to weaken on the election of the prime minister. this might be one of the catalysts necessary to make those cheap stocks reignite a bit. >> is part of this because of what the bank of japan is expected to do as well? >> exactly. this is the one country in the world that has been suffering with deflation almost 20 years and really the primest candidate for kwquantitative easing. they've been relatively lax at doing just that. >> so they've been lax at doing just that. but when you are fighting, they're kind of jumping into the stream at this point, all the other banks are full stream ahead with this thing. this levels the playing field,

you think? >> i think the real key is to what degree they could impact re-inflation. they have been in deflation and need to get to 1 positive 1 or 1 positive 2. it's so detrimental to the economy. the investor says why should i spend today if it will be cheaper tomorrow. that has the first thing they have to do. if by reflating, they could do that and get the deflationary expectation out of the mind of the consumer and weaken their currency, two things they really need to perk up corporate profitability. >> that's why you like toyota and cannon? >> cannon in particular has a big export market to europe. you think the yen has been strong, it's been really strong versus the euro. some of these japanese companies that have europe exposure are really hit hard because of that strong yen. now, we're starting to see some

of this reverse, which is very good for their corporate profitability. >> the other stocks you mentioned were i dia irkdaiwa a. >> daiwa gives you leverage on japan, one of the largest asset companies on japan and a brokerage firm. as more activity goes into the japanese equities, they're a prime beneficiary. as asset values in japan rise, they'll also make money that way. plus, it's extremely well capitalized. one could argue they're a bit overcapitalized. they're very safe and well-positioned for a rising market. >> david, thank you very much for your time today. >> thank you for having me. >> let's get back to our guests, glenn and ralph. you heard this conversation, where the united states could be versus other countries around the globe. what do you think about what the overall broad market

implications are at this point if we assume there's some sort of solution on the fiscal cliff? >> i think the number one longer term issue for this country and the fiscal cliff resolution is a big part of that, is strengthening our competitiveness in the global economy. there are a lot of elements to that. one is getting our fiscal house in order, we talked about. another is getting corporate tax reform, which lowers the rates. we have almost the highest corporate tax rates of any major economic power. it also means addressing things like regulations and work rules because today the number one issue of winning in the world is having the most competitive economy. i think, you know, because of the financial crisis, we've lost some sight of that over the last few years and we need to get back to cuts on that. >> where are you on right to work, out of curiosity? >> i'm a democrat.

>> i know. >> it's a very very difficult issue. >> sounds like you're saying we need to make -- >> i think it's a very difficult issue because it's one of those issues where on the one hand, we want a fair wage, but if we have a -- in some industries where there is global competitiveness. >> exactly. a market price. >> it's market price and fair wage destroys the competitiveness of our economy. >> what about you, glenn. >> i don't disagree but in the tech business, we don't deal with unions. >> you pay market price. >> what i would say, i'm a huge bull huge bull on america. if we get this fiscal cliff behind us, we still have a host of issues to deal with. we have to deal with the huge drag coming from europe. the brazilians have sort of screwed up with all the government intrusion there. we have to get back going again on global growth. but look what's going on in this country with the incredibly

innovation of technology, huge opportunities in natural gas, which i think is people are talking about price, but a huge increase in volume. and the uses around the country. and how clean energy is. it's a very valuable, important thing. one of the things people don't understand out of this financial crisis is that our capital markets are the envy of the world. they're a huge strategic tool we have to fund equity capital and long-term debt capital in ways that many of the countries around the world don't have. >> all you're talking about is privatizing. both of you see the government as a way to facilitate the private sector, a means to an end. >> i think the government has to enhance the competitiveness of the private sector. the only thing that i would probably disagree with you is i think a strong society is also a society that does not have quite

the breadth of difference in resource between the highest and most successful -- >> we've got to figure out how to do that. >> yeah, we all want to get to the same place. >> we have to do that without destroying the competitive instinct -- >> the global -- >> one of the things that's important to me, philosophically, is you take care of the people who can't take care of themselves. >> are we not doing that now? >> no, we need to make sure we do that. one of the deals on the table is it immunizes the poor and old, extends unemployment insurance for people who had long-term unemployment. as a part of these cuts, we need to make sure we continue to provide the resources to the most vulnerable. >> we do take care of them. he's worried about the people in the middle that are falling behind. >> what made this country great, i don't know about the people at this table, but both my parents were immigrants, my father was a bartender. and i'm sitting here. that's a remarkable thing about

this co and, you know, it's a little harder to go from that kind of a role to where we sit today, 20 years or 30 years from now. >> i want to be your child. >> we've been to a lot of bars. anyway, more from our guests, ralph schlosstein and glenn. ♪

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and if i do say so myself, i have never looked better. superderivatives introduces dgx. data done differently. we have two stocks to watch today. the treasury department announcing it intends to sell all its stakes in general motors over the next 15 months. they'll buy back their shares for $2.50 a share. that's about $5.5 billion. that's a premium of almost 8% from where that stock closed yesterday. you see the sharp gains in the stock on this today. it's up by 8.9%. also, fedex shares are rising as well. this comes after better than expected quarterly results. actually, the company was talking about where it sees the guidance for the full year. art hatfield was on earlier. the stock at this point is up by

about 1%. when we come back, the last word from our guest hosts. squawk will be right back. power down your little word game. i think your friends will understand. oh no, it's actually my geico app...see? ...i just uh paid my bill. did you really? from the plane? yeah, i can manage my policy, get roadside assistance, pretty much access geico 24/7. sounds a little too good to be true sir. i'll believe that when pigs fly. ok, did she seriously just say that? geico. just click away with our free mobile app. nespresso. where i never have to compromise on anything. ♪ where just one touch creates the perfect coffee. where every cappuccino and latte is only made with fresh milk. and where the staff is exceptionally friendly. ♪

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can i still ship a gift in time for christmas? yeah, sure you can. great. where's your gift? uh... whew. [ male announcer ] break from the holiday stress. ship fedex express by december 22nd for christmas delivery. let's get back to our guest hosts. we don't have a lot of time left. ralph, it takes me